Yes, according to reports, the prophet used lotion.
Anas ibn Malik reported that "God's Messenger often applied lotion to his head and frequently combed his beard. He would then cover his head and his robes looked like those of an oil trader." (Related by Al-Tirmidhi, Al-Bayhaqi and Abu Al-Shaykh.) This indicates the prophet regularly used some form of oil or lotion on his hair and beard.
